Maksim Zaslavskiy, a 39-year-old businessman from New York, has been sentenced to 18 months in prison after being convicted for “conspiring to commit securities fraud”, or more specifically running initial coin offering (ICO) scams.
The sentence was given by Senior United States District Judge Raymond Joseph Dearie on Monday (November 18) at the United States District Court for the Eastern District of New York
Zaslavisky was indicted in November 2018 as owner of the Diamond Reserve Club and REcoin Group Foundation, a pair of fraudulent cryptocurrency investment schemes. Zaslavisky was accused of marketing and selling both projects as coins backed by real-world assets. The REcoin ICO, in particular, was said to have been backed by real estate holdings that would provide intrinsic value for the coins and its buyers. Likewise, the Diamond Reserve Club was said to have been backed by real diamonds.
Zaslavskiy created fake whitepapers for each project and claimed both ICOs were supported by a team of “lawyers, professionals, brokers and accountants.” However, authorities discovered there were no assets backing the digital coins and no team of professionals supporting the project. It is estimated that Zaslasvskiy defrauded more than one thousand investors of funds and pocketed the money before abandoning the projects altogether.
U.S. Attorney Richard Donoghue, who oversaw the prosecution of Zaslavskiy, said:
Zaslavskiy committed an old-fashioned fraud camouflaged as cutting-edge technology. This Office will continue to investigate and prosecute those who defraud investors, whether involving traditional securities or virtual currency.
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